Mortgage lending drops to lowest level since December 2021

Mortgage payments

Gross lending with respect to remortgaging actually rose by 3.5% in Q1 2024, with ‘other’ gross lending also seeing growth of 9.7%

Total mortgage lending stood at just £50.5 billion during the first quarter of 2024, the lowest level seen since interest rates started to jump in December 2021.

As a result, total mortgage lending was 5.4% lower versus Q4 2023 and stood 13.1% below the total seen in Q1 2023.

Gross lending for house purchases dropped by 11.1% between Q4 2023 and Q1 2024, totalling £29.7 billion, as homebuyers continue to struggle with the highest cost of borrowing in today’s market, despite a hold on interest rates at 5.25%.

Nevertheless, further assessment of the data by Octane Capital shows that there are signs of positivity starting to emerge and these are being largely driven by those looking to remortgage.

Gross lending with respect to remortgaging actually rose by 3.5% in Q1 2024, with ‘other’ gross lending also seeing growth of 9.7%.

This indicates that the stability that has come through a hold on interest rates has, at least, helped to boost mortgage market sentiment amongst those who already have a mortgage in place.

While these early signs of growth are positive, there remains some way to go with respect to a return to form for the mortgage sector, with gross lending still lower on an annual basis for house purchases, remortgaging and other lending.

Octane Capital chief executive Jonathan Samuels says: Stability is key within the mortgage sector and such a sustained period of interest rate hikes was always going to dampen total gross lending.

While we have seen an air of stability materialise following a hold on rates, this has not been enough to rejuvenate lending on house purchases and we are unlikely to see any substantial improvement until such time that the base rate is lowered, he adds.

He says: The good news is that this decision could come within the next few months and, when it does, it will bring a much needed boost to mortgage market sentiment.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Getting Money Wise. The information provided on Getting Money Wise is intended for informational purposes only. Getting Money Wise is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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